WORLD'S LARGEST CELLULOSIC ETHANOL PLANT TO BE BUILT IN CHINAJul. 31, 2014Biofuels Digest reports:

From China, we hear that M&G Chemicals announced a joint venture with Anhui Guozhen CO, using PROESA technology licensed by Beta Renewables to convert 970,000-1,300,000 metric tons per year of agricultural residues into cellulosic ethanol, glycols and by-products such as lignin in Fuyang City (Anhui Province, PRC).

The biomass will be supplied by Guozhen under a long-term fixed price agreement, and the enzymes needed for the conversion of the biomass will be supplied by Novozymes as earlier announced.

M&G and Guozhen shareholding in the Green Refinery joint venture are 70% and 30% respectively, and the total joint venture investment is estimated to be around $325 million, to construct what will be by far the largest cellulosic (i.e. using non-food biomass) bio-refinery in the world.

The two companies further expect to soon announce the creation of a second joint venture, to convert the lignin into steam and electricity.

More about Guozen

Guozhen Group is an enterprise in Anhui Province, East China. With total assets of US$ 800 million, the group has been mainly involved in the business of environmental protection, natural gas, renewable energy, health and real estate, operating biomass power plant and CNG filling stations in Fuyang City.

More about Beta Renewables and PROESA technology

Beta Renewables, a subsidiary of Chemtex and Grupo M&G, developed and deployed its low-cost cellulosic biofuels technology, known as PROESA in recent years. The PROESA platform includes an integrated solution for ethanol and power production. The sugars produced from the PROESA pretreatment and hydrolysis process can be also be converted to renewable diesel and a range of bio-based chemicals using the bio-technology of third parties.

Based on pilot plant results, and backed by extensive agronomic studies, the PROESA solution is expected to produce ethanol that is competitive to commercial grade fossil fuels based on an oil price of USD 50-70/bbl. For bio-based chemicals, the PROESA pretreatment technology is expected to be capable of producing fermentable sugars at approximately 50-60% of the cost of market sucrose. The PROESA ethanol platform can also provide power, based on the burning of lignin, as a co-product for national grids.

PROESA technology has the capability to use a wide variety of feedstocks. Successful testing has been completed for a number of different energy crops (Arundo Donax, Miscanthus, Fiber Sorghum and Switchgrass) and biomasses including corn stover, rice husk and straw (wheat and barley).

The Economics

The Crescentino projected biomass cost was $40-$50 per tonne, or around $80-$100 per tonne of recoverable sugars, with around $150 per ton for the enzyme load. That's $230 to $250 per tonne, or around 10 cents per pound for the sugars - bump that up to 12 cents to account for other variable and fixed costs.

The ethanol numbers have a similar structure to the sugars data. $40-$50 for the biomass, or $160-$225 for the recoverable ethanol component per tonne. The yeast they peg at $10-$15 per tonne. $150 per tonne for the enzymes, and $50 for other fixed and variable costs. The total is $370-$440 per tonne or $1.11- $1.31 per gallon operating cost. They continue to guide based on a $5 per gallon capital cost per 20 million gallon project.

The Digest's understanding is that the cost was 90M euros for the Crescentino's cellulosic biofuels capacity itself, or around $5.60 per gallon for the capex the first time around - for 20 million gallons. This project is in the 70-90 million gallon range. So we are looking at roughly $3.56 to $4.14 per gallon of capacity. As Beta promised - big drop in capex this time around.

Reaction from the partners

Marco Ghisolfi, M&G Chemicals CEO, said, "I am excited about the completion of this first very important step towards the creation of the world largest second generation bio-refinery in Fuyang City and I would like to take the opportunity to thank Gouzhen management as well as the Fuyang City authorities for their partnership in this ground breaking and transformational enterprise."

Li Wei, chairman of Guozhen Group, said this is a very important project not only for Guozhen Group and M&G but also for Fuyang City as it will create a green and sustainable environment for Fuyang and bolster the local economy.